HNA Innovation Finance (HNA IF), part of the large China-based HNA Group empire that has made aggressive acquisitions throughout the world, is considering Malaysia as an ideal destination for investment as it pursues its Belt and Road initiatives in this part of the world.
“We are still seeking opportunities but we think Malaysia with a population of 32 million and sound trade relations with China will be an ideal destination in our consideration in the next stage,” says Guo Ke (pic), chief executive of HNA IF.
HNA Holdings Group, a listed unit of conglomerate HNA Group, privatised Singapore’s logistics and trade company CWT Ltd last year and has rebranded itself as CWT International Ltd.
The move to buy CWT, which is now a subsidiary of CWT International, is part of the HNA Group’s long-term strategy of tapping the opportunities from the Belt and Road initiatives that will be present in commodities trading and logistics.
HNA Group decided last year to utilise the Belt and Road initiatives to secure opportunities in trade, finance and connectivity that are approved by the Chinese Government.
Asean is an important cog in its plans. It was reported that HNA IF in December last year signed a deal to form a US$5bil fund with CT Bright, the investment unit of Thailand’s largest conglomerate CP Pokphand, to invest in Thailand’s Eastern Economic Corridor.
The report says that HNA IF and CT Bright will “contribute equally” to the starting 20% of the fund, while the rest of the capital will be raised from Chinese and Thai investors in the next three to five years.
The acquisition of CWT for US$1bil was also part of HNA Group’s plans to tap the growing demand for commodities and energy that will be created by China’s Belt and Road programme.
CWT, incorporated in 1970, has businesses involved in logistics, commodities trading, financial services and engineering services. It has built the largest logistics hub in South-East Asia and has links to over 90 countries, more than 200 ports and links to 1,600 regions globally.
“We are paying attention to those countries that are closely related to China in terms of trade, and also those areas which have the advantage of using the yuan. In Asia, we attach our importance to Hong Kong and Singapore and in Europe, we mainly focus on the United Kingdom,” says Guo Ke, who is also the chairman of CWT International.
“In terms of emerging countries, we mainly focus on three areas. One is the Asean countries, second central and eastern Europe and thirdly, we will focus on African countries that are strong in resources.
“In Asean, the demographics are one of our main focus. The large population of this region will promise HNA IF huge returns in the future,” he says.
He says future acquisitions in Asean will be in businesses that the HNA Group is already involved in.
“In terms of Belt and Road, we want to invest in aviation and tourism-related industries. Modern logistics is one of our focus and the acquisition of Glencore and CWT signals our expansion in modern logistics,” he says, adding that its investment in Deutsche Bank last year can act as a facilitator to support its development overseas.
“Our measures are in line with the development of the Belt and Road initiatives. What is most important in Belt and Road is improved connectivity in trade, finance and facilities.”
HNA IF has taken control of Glencore’s oil products storage and logistics business for US$775mil and will use the combined expertise of Glencore’s oil trading business together with CWT’s commodity trading business to expand its reach to satisfy demand that will be created by China’s Belt and Road initiative.
“All these deals are in line with our plans and future. Glencore is under HNA IF and there is a long-term strategy there.
“Through this long-term strategy, we will be establishing our relationship with Glencore but CWT is different.
“These two projects are in line with our strategy established in March last year where we want to utilise the Belt and Road initiative to get opportunities in trade, finance and connectivity that are approved by the government.
“We hope our development is in line with China’s national strategy. We want to enrich the supply chain and financial services for the whole country and internationally,” says Guo Ke.
HNA Group has taken stakes in various companies and businesses in the past, such as stakes in Hilton Group and Deutsche Bank, and Guo Ke says those assets will also offer different synergies to its plans involving its Belt and Road programme.
He says there are synergies that can be obtained from previous acquisitions for its Belt and Road initiative, as the technology, talent and management it can procure from its investment in European and developed countries can be combined with the resource-abundant countries in the future.